When the A-share market once again ushered in a bleak scene, the stock prices of more than 4,000 listed companies fell, while few stocks rose, which undoubtedly brought a heavy blow to investors. With market sentiment at a low point again, people have to ask: when will the A-share market bottom? When will the broader market index stop falling? In the face of such a market trend, we need to analyze calmly and make rational judgments.
01 How miserable is A-shares this year?
The situation of the A-share market this year can be described as complex, and its tragic situation cannot be fully described by a few figures. First of all, from the data level, the decline of the Shanghai Composite Index does not seem to be deep, only 1.76%, and on the surface it seems that the market is relatively stable, continuing to hover around 3,000 points. However, this is only the tip of the iceberg.
In-depth analysis, the CSI A50 fell by 0.62%, and the CSI 300 fell by 0.86%, which seems to be calm, but what is hidden behind this is the differentiation and turbulence of the market. The CSI 2000 fell by as much as 27%, a figure that reveals the dire situation facing small- and mid-cap stocks. Further, the average share price also fell by 27.19%, which means that if an investor bought a random stock this year, the average loss would be as high as 27.19%, which is undoubtedly a shocking number.
When we look further at the profit and loss of different investment strategies, we will find that the difference is even more significant. If an investor chooses to buy an index fund such as CSI 300 ETF or A50 ETF that represents large-cap blue-chip stocks, as long as they do not blindly chase higher, the loss will usually not be too large. This is because most of the constituent stocks of these ETFs are listed companies with stable performance and large market capitalization, which have a certain degree of risk resistance.
However, for investors who choose to buy the CSI 2000 ETF, the loss can be as high as 27%. The CSI 2000 Index mainly covers companies with small market capitalization, which tend to face greater operational risks and market uncertainty. As a result, the CSI 2000 Index tends to perform poorly in volatile markets.
To make matters worse, for those who are keen to buy junk stocks, the losses may have exceeded 30%. Junk stocks usually refer to listed companies that have poor performance, poor management, or even risk of delisting. These stocks tend to be highly volatile in price and extremely risky to invest in. Investors often ignore the risks behind these stocks while pursuing short-term profits, which ultimately leads to heavy losses.
02 There are mysterious funds trying to buy the bottom of the CSI 300 ETF to protect the disk, is it effective?
Although there are mysterious funds rushing to raise funds at the end of today's CSI 300 ETF index fund, the main contract of CSI 1000 stock index futures has fallen sharply, which undoubtedly brought a lot of surprise to the market.
Looking back on last week, mysterious funds continued to buy the CSI 1000 ETF, which was once interpreted as the national team funds seeking bottom-buying opportunities in small-cap stocks. However, the performance of the market today raises the question of whether these funds are really looking for long-term value investing, or are they just engaged in short-term speculation.
Judging by the current market situation, speculation in mysterious funds does exist. These funds quickly switched in the market, sometimes buying the CSI 300 ETF, and sometimes turning to the CSI 1000 ETF to buy small-cap stocks, but they have never been able to form a sustained upward momentum. What's more, the amount of these funds is also gradually decreasing, showing that the power of disk protection funds is relatively limited.
The CSI 300 ETF fell sharply at the beginning of the year, which is the characteristic of the mysterious fund bailout. At that time, the amount of purchases was in the range of about 10 billion to 15 billion per day, and the index also bottomed out. Recently, the CSI 300 ETF has also been protected by mysterious funds (obviously large), but it is not much bought, only 30-5 billion per day, and there is also a significant increase in the end of today.
In fact, this way of operation of the mysterious funds can only be said to be that they think that the current position needs to be properly protected, but it is not yet time to protect the disk on a large scale, so this does not have much effect on boosting market confidence.
In the absence of incremental funds to follow up, it is difficult for the market to form an effective uptrend. At the same time, due to the existence of the short-selling system, even if there are funds to buy the bottom, it is difficult to resist the suppression of short-selling forces. Therefore, the short-term bottom-buying behavior of mysterious funds can often only bring short-term fluctuations to the market, but cannot change the overall trend of the market.
So, why is this happening? From the perspective of the market environment, the current market is in a weak adjustment stage, and investor sentiment is generally cautious. In such a situation, even the national team funds cannot turn the market trend on their own.
From a policy perspective, although a series of measures have been introduced to stabilize the market, the effect of these measures is limited, and it is difficult to completely dispel the market's concerns. From the perspective of market structure, there are serious problems of capital differentiation and valuation differentiation in the current market. This makes some quality companies undervalued and some underperforming companies overvalued. In this case, the bottom-buying behavior of mysterious funds can often only bring short-term fluctuations, but cannot really promote the increase in market value.
Of course, we can't completely deny the market significance of the mysterious fund dipping behavior. To a certain extent, the operation of these funds does bring a certain amount of liquidity to the market, and also provides financial support for some high-quality companies. However, we should also be aware of the limitations and potential risks of these actions.
03 What's next for A-shares?
In the current volatility of the A-share market, investors are increasingly concerned about the future trend. Especially for core assets such as A50 and CSI 300, although there has not been a significant increase in the short term, in the long-term trend, as the mainstay of the market, it is still worth investors' attention. From the point of view of technical analysis, this afternoon the tick hit a new low, which actually provides a certain reference and expectation for the future trend of the market.
From a technical point of view, the evolution of market movements often follows certain rules. In the current market environment, we can observe several clear trends. First of all, the time-sharing chart hit a new low for adjustment, which indicates that there is a certain adjustment pressure in the market in the short term, however, this adjustment is not disorderly, but affected by certain structural support.
As I mentioned before, the realization of the three-pivot pattern (structure) since the adjustment of 3174 has provided important support for the market, and the existence of this structural support makes the market not excessively downward in the adjustment process, but will fluctuate within a certain range.
Next, let's look at how the market bottoms. According to the principles of technical analysis, there are usually two ways to see the bottom of the market: consolidation divergence and trend divergence. For the consolidation divergence, if the morning is no longer a new low or a slight dip after a quick reflexive upward past 2930, and then can pass 2950 to the right side of the confirmation, then this will be a positive signal, indicating that the market has completed a short-term adjustment and is about to usher in a new upward trend.
In the case of trend divergence, if the market does not see its lowest point until the afternoon, then it may mean that the market will need to go through a period of volatility and correction. But in any case, once the market forms a bottom structure, then there is a high probability that the follow-up will come out of the same second long leg as last Friday, forming a "double-needle bottoming" trend, laying a solid foundation for the market's rise.
In a weaker market, trading on the left tends to be riskier. Therefore, for investors, if they want to participate in the trading of the market, it is better to wait for the right structure to be confirmed before following. This not only reduces the risk of trading, but also increases the certainty of trading. Of course, while waiting for the confirmation of the structure on the right, investors also need to remain patient and confident and not be affected by short-term fluctuations in the market.
In terms of sectors, the securities sector has recently broken down and the decline is not over. However, from a valuation perspective, the valuation of the securities sector is already at a low level and has high investment value. Therefore, for investors who already hold stocks in the securities sector, it is recommended to hold patiently and wait for the market to stabilize before continuing to increase their positions.
For the new energy sector, the leading electric vehicle and power battery leading are core assets with high growth and investment value. These enterprises not only have advanced technology and strong R&D strength, but also have broad market prospects and strong brand influence. Therefore, investors can patiently hold the shares of these companies and wait for the market to rise further.
Of course, the investment market is always uncertain. Although we can predict the movement of the market through technical analysis and fundamental analysis, the actual movement of the market is often affected by a variety of factors and is difficult to predict. Therefore, investors need to be cautious and rational when participating in market transactions, and do not blindly follow the trend or listen to market rumors and make wrong decisions. At the same time, investors also need to continue to learn and improve their investment skills to better respond to market changes and challenges.
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Announcement Statement:
All information and expressions in this article only represent the author's personal views, and do not constitute investment advice and trading basis, and are for reference only! The subject matter involved is not a recommendation and is only for communication. I do not bear any responsibility for the losses incurred, and investors need to be responsible for their own investment behavior.